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Credit Cards How many cards do you have ? Do you know the terms: interest rates, annual fees, due dates, etc ? What kind of balance do you carry ? What do you use the cards for ? 76 % of undergrads in 2004 started the year with credit cards Average credit card debt – undergrads $2,327, grads $8,612

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Credit Cards Universal Default Clause Allows your credit card company to increase your interest rate on their card, if you are late making a payment to another company. This is legal ! Some companies raise rates when customers’ risk profiles worsens (near limits) February 2009 update: many companies are now increasing interest rates due to the current economic climate. Borrowers can opt out, which will freeze the current rate, but cancel the card for any new purchases.

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Credit Cards If you Paid the minimum monthly payment: Current Balance:$2000 Starting monthly payment 2% of balance $40 Annual Percentage Rate15% Total number of payments262 months = 22 years Total Interest Paid$2,790 If you Paid the minimum monthly payment: Current Balance:$2000 Starting monthly payment 2% of balance $40 Annual Percentage Rate15% Total number of payments262 months = 22 years Total Interest Paid$2,790 If you Paid the minimum monthly payment: Current Balance:$2000 Starting monthly payment 2% of balance $40 Annual Percentage Rate15% Total number of payments262 months = 22 years Total Interest Paid$2,790 If you Paid the minimum monthly payment: Current Balance:$2000 Starting monthly payment 2% of balance $40 Annual Percentage Rate15% Total number of payments262 months = 22 years Total Interest Paid$2,790 If you pay the minimum monthly payment: Current Balance: $2000 Starting monthly payment: 2% of balance $40.00 Annual Percentage Rate: 15% Total number of payments: 262 months = 22 years Total Interest Paid: $2,790

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Credit cards are good for emergencies: “If you can Eat it, Drink it, or Wear it……It is NOT an Emergency !” Keep your cards in the freezer to prevent impulse buying Do emergencies happen at the mall ?

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Credit Bureau Reports For THE free report: one each from 3 agencies once a year. Can get FICO score for a small fee. Purpose: self-review for incorrect data: your address, who you owe, missed payments Others advertise, but they really aren’t free (you are signed up for a monthly membership)

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Credit History Each agency is different. You may want to pull from one agency at a time and rotate over the year. Some corrections can be made online or by phone; some require documentation or written request. If you co-sign for someone, it may be listed. Inquires are listed (who is looking at your credit? ) Information stays on the report at least 7 years

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FICO Scores – (Fair Isaac Corp) (offers good consumer info, but there is a fee to obtain your score) Recently, Experian stopped selling credit scores to individuals. FICO® scores are your credit rating They range from , higher is better Most lenders base approval on them Higher scores mean lower interest rates The median FICO® score in the U.S. is gets the best interest rates for tiered loans

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FICO Scores Key Factors of your Score: How you pay your bills (35%) Amount of money you owe and the amount of available credit. (30%) Length of credit history (15 %) Mix of credit (10%) New credit applications (10%)

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FICO Scores How to raise a FICO: Pay bills on time Keep balances low on credit cards Pay off debt rather than moving it from one card to another. Keep credit card balances well under the credit limit. Beware of closing accounts that change your percent of owed/limit to higher than 25%. Don’t open a lot of new accounts at once, if you have a short credit history. Apply for new credit only as needed.

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FICO Scores Each credit bureau may have a different score for you

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Identity Theft Shred financial documents, credit card offers that come in the mail Don’t give out personal information on the phone or in response to inquiries. Only carry credit cards that you plan to use. Only use credit cards on secure websites. If it happens, close accounts, put a fraud alert on your credit reports, notify police, report it to the Federal Trade Commission. You can buy services that monitor your credit, if you think there may be a problem.

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Reduce Direct Mail Offers Opt out of promotional inquires Call 888-5OPTOUT Or online at (click on remove my name from these lists)

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DO NOT CALL List To get off telephone call lists: You may still get calls from companies you already do business with, along with political candidates, and non-profit organizations. It does take a month or two to take effect. $1 fee to sign up online.

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Budgeting Revolving consumer credit as of December 2008 was $963.5 BILLION (but is dropping) Everyone should have a budget and financial goals. Needs vs. wants

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Budgeting Pay yourself first ! Set Financial Goals (pay off a debt or save a certain amount – set a deadline) Budget calculator at - search budget Try keeping track of all money spent for a week or month (flexible spending) Compare your budget to actual

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Student Loan Debt Always borrow the Federal loans first Beware of “Direct to Consumer” loans that don’t require a school certification – they usually have a higher interest rate. Look for other options – summer jobs, Payment Plan for tuition bill, savings, scholarships. How is the interest rate determined ? Prime rate was 21.5 % at one time ! Be sure you know how much you owe and who you owe it to !

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Frugal is the new Cool ! The internet is also full of hints on the subject of cutting costs, learning to save, and simple living. Less is more ! Choose to save ! Discover the joys of cheap entertainment.

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Websites for your free credit bureau reports for FICO infowww.myFico.com for identity theft infowww.ftc.gov/idtheft reduce direct mail offerswww.dmaconsumers.org reduce telemarketing callswww.donotcall.gov then search for budget, for the budget calculatorwww.dl.ed.gov Searching the internet for any debt management term will result in many hits. When using this information, consider the source. Click on “about us” or similar links to determine if you have found a neutral site. Don’t pay for anything you can get for free.

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Your money for life This was prepared by Anne Moomey, Student Loans Manager at Clarkson University Any weblinks indicated were selected because they seemed to offer useful information to consumers and not because of any lender list preference. Comments and suggestions are appreciated – Prepared February 2009